Virginia's economic recovery key to 2012 race

@CNNMoney March 5, 2012: 11:56 AM ET
Virginia's economic recovery key to 2012 race

President Obama on the road in Northern Virginia.

NEW YORK (CNNMoney) -- They might not be the hottest commodity on Super Tuesday, but Virginia voters are set to become one of the most sought-after prizes of the upcoming general election.

In 2008, Obama carried the state in one of the cycle's biggest surprises. Before that, Virginia had gone to the Republicans in every presidential contest since 1964.

This year, the Obama campaign's efforts to hold Virginia will be complicated by the divergent strength of the economic recovery in the state. While some rural counties are still struggling to recover from the recession, the suburbs that surround the Washington, D.C. area are flourishing from their proximity to the federal government.

"I think we weren't hit quite as hard because we have a pretty diverse economy," said Ann Macheras, head of regional research at the Richmond Fed. "We're not as dependent on manufacturing as some of the states in the Midwest."

Even with pockets of very high unemployment, Virginia's economy is doing quite well compared to most states. Overall unemployment is 6.2%, far better than the national average.

In Northern Virginia, unemployment is particularly low compared to both the state and national averages.

Places like Fairfax County, heavily dependent on government spending and defense contracting, are doing just fine. The county's unemployment rate was 4.2% in December.

The Washington metro area added 49,200 jobs -- the most of any large market -- in the year ended November 2010, according to the George Mason Center for Regional Analysis.

Growth dropped off in 2011 to 8,800 jobs gained as losses hit the federal government, manufacturing, retail and construction.

Macheras said some of the momentum loss can be attributed to uncertainty over federal government spending levels, which caused some firms to hold back on hiring.

But Northern Virginia is still doing quite well compared to many other metropolitan areas.

And that's good news for Obama, who crushed John McCain in the suburban counties around Washington D.C. in 2008, capturing 60% of the vote in populous Fairfax County and 72% in Arlington and Alexandria Counties.

It's still uncertain who his opponent will be this year, but Mitt Romney is the presumed victor in the state on Tuesday. Newt Gingrich and Rick Santorum aren't even on the ballot after failing to get enough signatures.

Obama is likely to do well in Northern Virginia again -- as federal dollars have buoyed the region.

Swing state economies complicate 2012 picture

Federal funds accounted for almost 40% of spending in the greater Washington area in 2010, according to data from GMU. That money has brought new, high-paying jobs to the region.

In 2012, federal spending is projected to increase another 1%, while economic growth in the region is expected to hit 2.7%.

"Virginia would practically close up shop if not for the federal government," said Larry Sabato, director of the University of Virginia Center for Politics.

High levels of military spending have provided a boost to Hampton Roads, an outpost in the southeast corner of the state home to a natural harbor and several large military installations.

However, the sunny story of economic prosperity and a robust recovery falls apart in the southern and western parts of the state, where unemployment remains high.

Southern counties like Henry and Halifax, along with Smyth and Grayson in the West, all have unemployment rates near 10%.

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"Those are the areas where they have been more dependent on manufacturing," Macheras said. "They continue to have unemployment rates that are much higher than the state average as they transition away from the manufacturing of textiles and furniture."

Those are also the areas that -- by and large -- favored John McCain in 2008.

Adding to the good news for the White House, recent polling shows the president's approval ratings moving higher in Virginia. Obama edged ahead of Mitt Romney in a hypothetical state-wide matchup for the first time earlier in February, according to a poll from Quinnipiac University.

Forty-seven percent of respondents said they would vote for Obama, while 43% said they would choose Romney.

But the same poll also showed Obama's approval rating is underwater in the state, as 46% of Virginians approve of the job he is doing, while 49% do not.

If the general election turns out to be, as most observers anticipate, a referendum on the economy, and those concerns stay localized, Obama could fare quite well. To top of page

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